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ServiceNow (NYSE:NOW) Invests Heavily in UK Data Centers
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ServiceNow (NYSE:NOW) Invests Heavily in UK Data Centers

Story Highlights

ServiceNow piles into data centers in the UK, and investors are mostly behind it.

Data centers are a booming business these days, and for enterprise software leader ServiceNow (NOW), it is a business that will boom even harder in the coming days, thanks to some upcoming investments in the United Kingdom data center field. Investors viewed the news as a modest win and sent shares up fractionally in Monday afternoon’s trading.

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ServiceNow looks to put $1.5 billion into the United Kingdom’s data center market over the next five years in a bid to build up the necessary infrastructure for artificial intelligence. But as it turns out, ServiceNow will not be alone there. In fact, a group of other companies, including CoreWeave, will be coming in to put in a combined total of 6.3 billion pounds sterling, according to the United Kingdom government.

ServiceNow’s part of the arrangement, reports note, will focus on new office space, new staff hires, and a particular move into processing data locally to be used in large language models (LLMs). LLMs need enormous amounts of data to be effectively trained, and ServiceNow can help deliver therein.

Pushing AI Growth

It is not much of a surprise to see ServiceNow making a stronger push into the AI market because—as we have seen over the last several months—the AI market is on an absolute tear. Plus, ServiceNow offers a downright compelling market thesis: it offers a means to improve productivity through largely automated systems. This means reduced employee costs with little loss in terms of overall productivity.

ServiceNow, for its part, believes that AI will have an impact on the overall economy in the range of $11 trillion. Getting in line for a slice of that pie, therefore, makes particular sense and explains why ServiceNow is willing to stake nearly a multi-billion dollar stake in the future of this sector.

Is ServiceNow Stock a Good Buy Right Now?

Turning to Wall Street, analysts have a Strong Buy consensus rating on NOW stock based on 28 Buys, one Hold, and one Sell assigned in the past three months, as indicated by the graphic below. After a 70.55% rally in its share price over the past year, the average NOW price target of $908.88 per share implies 3.4% downside risk.

See more NOW analyst ratings

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